Commercial Metals Company (CMC)

Interest coverage

		Feb 29, 2024	Nov 30, 2023	Aug 31, 2023	May 31, 2023	Feb 28, 2023	Nov 30, 2022	Aug 31, 2022	May 31, 2022	Feb 28, 2022	Nov 30, 2021	Aug 31, 2021	May 31, 2021	Feb 28, 2021	Nov 30, 2020	Aug 31, 2020	May 31, 2020	Feb 29, 2020	Nov 30, 2019	Aug 31, 2019	May 31, 2019
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	930,363	1,047,001	1,162,094	1,268,778	1,368,282	1,644,604	1,565,856	1,417,421	1,179,517	759,079	586,228	481,892	405,291	406,503	433,816	454,375	476,436	424,391	339,147	292,404
Interest expense (ttm)	US$ in thousands	40,771	38,838	40,127	46,098	50,653	52,719	50,709	48,138	46,670	48,680	51,904	54,207	57,651	59,518	61,837	65,577	68,681	71,288	71,373	69,325
Interest coverage		22.82	26.96	28.96	27.52	27.01	31.20	30.88	29.44	25.27	15.59	11.29	8.89	7.03	6.83	7.02	6.93	6.94	5.95	4.75	4.22

February 29, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $930,363K ÷ $40,771K
= 22.82

The interest coverage ratio for Commercial Metals Company has shown a generally increasing trend over the past two years, indicating the company's improving ability to cover its interest expenses with its earnings. The ratio was highest in August 2023 at 28.96 and has stayed above 25 for most of the recent periods. This suggests that the company's earnings are significantly higher compared to its interest expenses, providing a comfortable cushion to meet its debt obligations.

It is worth noting that there was a significant improvement from the lower ratios reported in late 2021 and early 2022, with the ratio increasing from 8.89 in November 2022 to 31.20 in February 2023. This improvement indicates that the company's financial performance has strengthened, likely due to increased profitability or a reduction in interest expenses.

Despite some fluctuations in the ratios, the overall trend is positive, showcasing the company's ability to generate sufficient earnings to comfortably cover its interest payments. Investors and creditors may view this trend favorably as it indicates financial stability and the ability to manage debt obligations effectively.